Natwest one account.

IT_nerd

Hi there.
I'm thinking of buying a small flat which is currently on the market for £60K (Thanks, credit crunch and panic).
I have managed to save up £16,500 as a deposit.
Now as I was looking up mortgages I found this one account dealio, and remembered hearing it now and then on the TV adverts. But I never paid attention.
Anyway, I looked at that offset mortgage sticky and couldn't make heads or tails of it.

The way I save at the moment is with £1000 milestones. Everytime my bank account goes up the magic number of £1000 I feel well good about it. Which means i've been saving about £500+ a month recently.

Which leads me to believe I would pay more into my mortgage if I could see it as one big account. And making that -xx,xxx go down would have an equal effect. It's like a game.

However I only earn about £950 after tax each month. Is it still benificial for me to go with this one account?

I think it suits my saving style. But I don't want to be bent over if it doesn't fit in with the money I earn.

Thanks guys.

Edit: Also, how does the deposit work? Do I just say I have 16K savings then they give me a mortgage of lets say 60K then I pay off 16K worth instantly?

Cat695

A one account mortgage is very good for someone who saves alot a month and has spare cash......you can really reduce the time you pay for your mortgage.......what you can do is either pay off the mortgage with the spare cash OR just pay off the interest you owe

if you just pay off the interest it will reduce your mortgage but you can have cash back if you are tight one month

It would be worth actually speaking to natwest about it....like i said very good for people who have spare cash/good at saving

getmore4less

There are much better deals that the one account which do the same thing.

First Direct is looking good at the moment, but check the other offset products.

You are doing well if you are saving £500 some month must have some very low outgoings.

Have you done a full budget/SOA of a before and after buying to see how much money you will have leftonce you buy?

http://www.makesenseofcards.com/soacalc.html

Owning a place costs more than just a mortgage.

To get a reasonable rate you need to borrow less than the valuation so on £60k putting down £12k will give you a 80% LTV which is good, £15k would be 75% LTV even better but you need to pay the costs and will need an emergency fund so that would be tight with only £16.5k savings.

As a very tough guide with interets rates around 6%(0.5%per month), £60k will costs around £300pm, might be worth waiting a bit longer, especialy if you current rent commitments are below this.

ixwood

Key question is what's the rate and fees?

IT_nerd

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 950
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 25
Total monthly income.................... 975

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 40
Clothing................................ 0
Petrol/diesel........................... 55
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 130

Assets
Cash.................................... 16500
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1750
Other assets............................ 0
Total Assets............................ 18250

No Secured Debt

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 975
Expenses (including secured debts)....... 130
Available for debt repayments........... 845
Monthly UNsecured debt repayments....... 0
Surplus(deficit if negative)............ 845

Personal Balance Sheet Summary
Total assets (things you own)........... 18,250
Total Secured debt...................... -0
Total Unsecured debt.................... -0
Net Assets.............................. 18,250

Current outgoings above.
Hopeful outgoings with a flat

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 950
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 25
Total monthly income.................... 975

Monthly Expense Details
Mortgage................................ 480
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 95
Electricity............................. 70
Gas..................................... 10
Oil..................................... 0
Water rates............................. 10
Telephone (land line)................... 10
Mobile phone............................ 30
TV Licence.............................. 9
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 70
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 10
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 964

Assets
Cash.................................... 1500
House value (Gross)..................... 55000
Shares and bonds........................ 0
Car(s).................................. 1750
Other assets............................ 0
Total Assets............................ 58250

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 40000....(480)......6
Total secured debts........... 40000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 975
Expenses (including secured debts)....... 964
Available for debt repayments........... 11
Monthly UNsecured debt repayments....... 0
Surplus(deficit if negative)............ 11

Personal Balance Sheet Summary
Total assets (things you own)........... 58,250
Total Secured debt...................... -40,000
Total Unsecured debt.................... -0
Net Assets.............................. 18,250

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

Sure, It looks like I wont have much left but i'll be able to save on some of those expenses.
And I went worst case scenario on utilities.

getmore4less

OK that show it up nicely, from loads surplus to tight for money.

Car seems to run itself no, tax, insurance, repairs etc.

Life Insurance? no dependants you don't need it.

With a car and house you need an emergency fund, say £30pm (thats the Life ins. so still balances).


I think I would hang on a bit there will be more of these places come up so in the mean time you are putting away £500pm with ease.

Do you have all the kit to furnish a flat?

IT_nerd

Car is something where I do everything once a year. I insure it in full. I tax it in full. Maintenence is low.
Basically, as I believe it, if any really big problems happen then I can draw money from what I have paid into the one account as overpayments (?).. !!!! but if worst comes to worst.

Which leads me to my next question.

If I choose interest only one account, I can still overpay as much as I like.. Can't I?

So what's the point of even signing up for the capital and interest option when you could basically have a super flexable mortgage where if I can afford the £500 payents then I do, but if I can't then I just pay the interest which is an alot cheaper £200?

Or am I looking at this all wrong?

Also:

Life Insurance? no dependants you don't need it.

Yeah, but I would like to know that if I die for whatever reason that my sis and bro would get some money.
Worth £30 a week. And if you set up a policy when you're young you can keep it for life at that rate. So it will be worth it when I do have dependants.

IT_nerd

Oh, and another thing. Would it be best to set up all direct debits I might have to fall on something like the 27th, since I get paid on the last of the month.
That way more money is in the account for longer. Is that right?

Edit: Also, I phoned up about the 60K flat. I asked if there has been lots of interest and they said yes since after the auction. (Bullsh!t?)
Basically the owner set the sale price as the auctions guide price. Which is way undervalued imho. Undervalued by as much as 20% I would say. Which is why I like it with the current climate and predictions.

So now I am wary of putting in an offer for less than the guide price.

It's dirt cheap already, and if someone offers 60 and I offered 55... Guess who gets it

I don't know what to do.


Edit: Also someone said about kitting out the new flat. Luckily (Long, sad, depressing story) my dad is moving to thailand and selling the house. So he has no need for its contents.
So that's a dishwasher, washing machine, hover, fridge, all the expensive stuff sorted. I am very much looking on the bright side of what he's doing though.

getmore4less

IT_nerd wrote: »

Car is something where I do everything once a year. I insure it in full. I tax it in full. Maintenence is low.
Basically, as I believe it, if any really big problems happen then I can draw money from what I have paid into the one account as overpayments (?).. !!!! .

OK so both those SOA are incomplete, you need to budget for at least a year, and the SOA shows the average per month for a year full expences.

With £11pm spare you cannot afford to tax,insure the car for the next year when they are due without eating into your savings.

getmore4less

IT_nerd wrote: »

Yeah, but I would like to know that if I die for whatever reason that my sis and bro would get some money.
Worth £30 a week. And if you set up a policy when you're young you can keep it for life at that rate. So it will be worth it when I do have dependants.

BY the time you have dependants, the cover you need will be higher and you will need cover ofr other things like health and many jobs provide the cover anyway, no need for cover now, better off paying off your debt and leaving the equity.


If you really wanted to leave them(siblings) something you would have the cover now why wait till you buy a place, they are unrelated events.

riad_2

I, like you, manage to save away quite a bit in some months due to low expenses every now and again (e.g. eating out of the freezer instead of the local indian!!).. and therefore am also a great fan of offset accounts.

But to be honest the one account is not the most competitive offset out there. The First Direct (Base + 0.99% = 5.99% currently) would appear to be the best buy offset at the moment (and is completely fees free!).

Good luck in whatever you decide!